Standing Committee B

[Mr. Peter Pike in the Chair]

Gambling Bill

Peter Pike: I am sorry for the delay, but I was not expecting to be in the Chair until 2.30 this afternoon. There seems to have been some misunderstanding in the communications.

Clause 330 - Interpretation

Amendment made: No. 238, in clause 330, page 146, line 11, at end insert— 
'''non-commercial betting'' has the meaning given by section [Non-commercial betting],'.—[Mr. Caborn.]

Malcolm Moss: I beg to move amendment No. 385, in clause 330, page 146, leave out lines 33 to 37.
Happy new year, Mr. Pike. This is a probing amendment. There are apparently three definitions of ''prize'' in the Bill and we believe that that could lead to some confusion and perhaps, down the road, to some litigation in order to interpret the meaning of the word. In particular, we feel that the exclusion of the reference to winnings in clause 61—we tabled an earlier amendment on that—seems unfortunate because the reference to winnings was previously one of the defining elements for distinguishing between gaming and a lottery. The definition of a prize for a lottery should include anything of value, as the present law states.

Richard Caborn: Happy new year, Mr. Pike; let us hope it is a productive one. Perhaps I can explain why there are three separate definitions of the word ''prize'' in the Bill. As we discussed in our very first Committee sitting, and as the hon. Gentleman said, we have modernised some of the definitions in the existing legislation. In doing that, we have worked hard not to leave out any necessary elements. There was a concern that our definition of gaming had left out winnings, but in fact our definition of prize in clause 6 expressly includes winnings at subsection (5). That is our first definition. In relation to gaming, the definition needs to include prizes and winnings, where winnings are the money staked and prizes are things put up in advance by the operator.
Turning to the subject of gaming machines, we want to ensure that people do not evade the limits on what can be won from a machine by claiming that their particular prize is outside the definition. We could simply have put ''money'' or ''money's worth'', but we felt that it was important to be clear that when we are talking about a prize from a machine, we really do  mean anything that can be won by playing it. Our second definition refers to any moneys, articles, rights or services won. 
Lastly, we have provided a separate definition for a prize from a lottery. There is a degree of duplication between the definition of a prize from gaming machines and a prize in a lottery. That is deliberate because in both cases we want to ensure that any sort of benefit is covered. However, importantly, we need to make it clear that where people participating in a lottery put up part of the prize, that does not stop it being a prize. It is not just an independent prize put up by the lottery operator that counts. It is any form of prize offered. 
I hope that that explains why we need three definitions of the word ''prize''. We believe that they are needed to deliver that policy. I hope that that explanation is comprehensive, but if it is not and if members of the Committee need more details, I am willing to provide them in writing. 
Perhaps I can take this opportunity to draw the attention of Members to a letter that I sent to them correcting one point that arose during the debate on clause 310. In the debate on 16 December 2004, I inadvertently advised the Committee that the Government had offered assurances to Alderney and the Isle of Man that they would be white-listed under subsection (3) of clause 310. In fact, the Government have not yet formed a view on territories to be white-listed. The Secretary of State has received applications from Alderney and the Isle of Man on that issue and those applications will be considered against the criteria that I outlined on 16 December. I am sorry for reporting the position with that slight inaccuracy. 
I also apologise for steering off the amendment to give that explanation. I hope that, with my explanation, the hon. Gentleman will withdraw his amendment.

Peter Pike: I was grateful for the Minister's letter. Last night I thought at first that it said, ''a policeman only wearing his helmet.'' However, it did clear up the position.

Malcolm Moss: You seem to have started the new year on a good note, Mr. Pike. You have had the letter; I have not. Opposition Members have not received it yet. It is obviously winging its way to us by the usual pigeon post.
I am grateful to the Minister for his helpful explanation. The area is a complicated one and it might be helpful to Committee members if he wrote to us, setting those matters out so that they are put on the record. Those expressing concern would then have that in black and white. On that basis, I beg to ask leave to withdraw the amendment. 
Amendment, by leave, withdrawn. 
Amendments made: No. 24, in clause 330, page 147, line 39, leave out 'entering' and insert 'participating in'. 
No. 363, in clause 330, page 146, line 43, at end insert 
'''pub gaming machine permit'' has the meaning given by section [Pub gaming machine permits],'.—[Mr. Caborn]

Malcolm Moss: I beg to move amendment No. 386, in clause 330, page 148, line 14, at end insert—
'(d) shall include betting as referred to in section 9.'. 
Again, I shall be brief. Clause 9(1)(a), referred to in the amendment, deals with making or accepting a bet on the outcome of a race or ''other event or process''. Clause 330 refers to a virtual game or other event or process. It is rather unclear whether that refers to games or virtual events and virtual processes. The clause should be clarified in the way that our amendment suggests so that the meaning is clear.

Richard Caborn: I agree with the hon. Gentleman that it is important to be clear that betting on virtual events is permitted under the Bill. During the past few years, there has been a significant increase in the contribution that products such as virtual greyhound racing make to the bookmakers business. It is certainly not the intention of the Bill to deprive them of legitimate betting product. However, the amendment is quite unnecessary. Clause 9 states clearly that betting can take place on the outcome of any event or process, which includes the outcome of a virtual event.
Other provisions in the Bill expressly refer to betting on virtual events. Clause 64 expressly states that holders of the casino and general betting operating licence may apply facilities for betting on virtual events. That is well complemented by clause 164, which ensures that holders of casino and betting premises licences are able to make available facilities for betting on virtual events. In light of that, I believe that the amendment is unnecessary and I urge the hon. Gentleman to withdraw it.

Malcolm Moss: I am grateful for the Minister's explanation and on that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn. 
Clause 330, as amended, ordered to stand part of the Bill. 
Clauses 331 and 332 ordered to stand part of the Bill.

Clause 333 - Amendments and repeals

Amendment made: No. 32, in clause 333, page 150, line 4, at end insert 
'(subject to the Note to that Schedule).'.—[Mr. Caborn] 
Clause 333, as amended, ordered to stand part of the Bill.

Schedule 13 - Minor and consequential amendments

Richard Caborn: I beg to move amendment No. 412, in schedule 13, page 195, line 8, at end insert—
 A1 In section 44 of the Metropolitan Police Act 1839 (refreshment houses)— 
(a) omit '', or knowingly suffer any unlawful games or any gaming whatsoever therein,'', and 
(b) in the heading, omit '', or gaming''.'.

Peter Pike: With this it will be convenient to discuss amendment No. 415, in schedule 14, page 199, line 6, at end insert—
 'Metropolitan Police Act 1839 (c.47)The words '', or knowingly suffer any unlawful games or any gaming whatsoever therein,''.'.

Richard Caborn: The offence of knowingly suffering unlawful gaming or gaming in refreshment houses in London is superseded by the provisions in the Bill. The amendments add this part of the Metropolitan Police Act 1839 to the list of repeals that will be necessary following the enactment of the Bill.
Amendment agreed to.

Richard Caborn: I beg to move amendment No. 413, in schedule 13, page 196, line 9, leave out 'or bingo premises licence' and insert
', bingo premises licence, adult gaming centre premises licence, family entertainment centre premises licence or betting premises licence'.

Peter Pike: With this it will be convenient to discuss Government amendment No. 414.

Richard Caborn: Paragraph 7 of schedule 13 refers to section 40 of the London Local Authorities Act 1995, which enables London's local authorities to grant alcohol licences for near-beer premises. To qualify for a near-beer licence, alcohol can be sold only if it is to be consumed on the premises and the operator must provide companions for customers or light entertainment; I am not sure what that means, but we might find a definition. Premises licensed under part 2 of the Gaming Act 1968—casinos and bingo clubs—are excluded from that regime. We are extending the provision to include adult gaming centres, family entertainment centres and betting offices. Such premises currently do not serve alcohol but there is nothing to prevent them from seeking a near-beer licence if they wish to do so. The amendment would close that loophole.
Amendments Nos. 413 and 414 are necessary to ensure that adult gaming centres, family entertainment centres and betting offices will be excluded from the near-beer licence regime. 
Amendment agreed to. 
Amendment made: No. 414, in schedule 13, page 196, line 10, after 'Part 8' insert 
', or a family entertainment centre gaming permit under section 231,'.—[Mr. Caborn.] 
Schedule 13, as amended, agreed to.

Schedule 14 - Repeals

Amendments made: No. 415, in schedule 14, page 199, line 6, at end insert— 
 'Metropolitan Police Act 1839 (c.47) The words '', or knowingly suffer any unlawful games or any gaming whatsoever therein,''.'.No. 33, in schedule 14, page 200, line 36, at end insert—
'National Lottery etc. Act 1993 (c. 39) Section 2. Section 18(1) to (4). Section 45. Section 46(3). Sections 47 to 59. In Schedule 1, paragraphs 1 and 2. Schedules 7 to 9.'. No. 34, in schedule 14, page 201, line 14, at end insert— 
'Note 
The repeal of section 2 of the National Lottery etc. Act 1993 shall not extend to Northern Ireland.'.—[Mr. Caborn.] 
Schedule 14, as amended, agreed to. 
Clauses 334 and 335 ordered to stand part of the Bill.

Schedule 15 - Transitional

Richard Caborn: I beg to move amendment No. 418, in schedule 15, page 202, line 1, after 'use', insert
', or could lawfully be used,'. 
This drafting amendment is relevant to our new casino policy, which we will discuss in detail later. It refers to paragraph 3(a) of schedule 15, which enables the commencement order bringing into force part 8 of the Bill to include transitional provisions allowing casinos that are already operating when this part of the Bill comes into force to continue to do so. 
Amendment No. 418 extends that provision to premises for which a premises licence has already been issued, whether or not a casino has begun to operate there. A licence holder under the current Gaming Act 1968 will still be able to operate as a casino after the new regime comes into force, even if it has not begun operating by then. That will avoid penalising operators who, for a wide variety of practical reasons, may not have their casinos up and running before this part of the Bill commences. 
Amendment agreed to. 
Schedule 15, as amended, agreed to.

Clause 336 - Extent

Amendment made: No. 410, in clause 336, page 150, line 33, after '40,', insert — 
 '( ) section 310,'.—[Mr. Caborn.] 
Question proposed, That the clause, as amended, stand part of the Bill.

Mark Prisk: I do not intend to detain the Committee too long, but I want to establish on the record whether there is the potential for confusion if an operator is based in Northern Ireland. I am particularly concerned with subsection (2). Unlike subsection (1), it states:
 ''The other provisions of this Act shall extend only to— 
(a) England and Wales, and
(b) Scotland.'' 
I assume—that is always dangerous, but particularly with this legislation—that that means that the other provisions to which the subsection refers would be relevant if an operator is based legally in Northern Ireland but has associated or linked operations in England, Wales or Scotland. I would be most grateful if the Minister clarified exactly the nature and scope of how the provisions will operate if a company that is legally based in Northern Ireland does or does not have direct or indirect operations in England, Wales or Scotland. I would be most grateful if the Minister assisted us.

Richard Caborn: The Bill applies to Northern Ireland on only two counts. The first is chain-gifting, which will become an offence in Northern Ireland under clause 40, and the second is the repeal of sections 9 to 9B of the Betting and Gaming Duties Act 1981. Gambling regulation is devolved to Northern Ireland, but it was agreed that those two matters should be extended to cover the whole of the UK. If a Northern Ireland operator had premises in Great Britain, they would need an operating and a premises licence to operate in Great Britain.

Mark Prisk: If I might follow that up briefly, it seems that there is a differential in the regulatory burden for operators who are based in Northern Ireland. I am aware that this was generally established at the beginning of the deliberations on the Bill, but there seem to be some avenues for confusion. I am slightly concerned that the Bill's application may get caught up between the two regions and lead to uncertainties among operators.
Can the Minister assure the Committee that the Department has considered the matter with great care and that it will ensure that there is no confusion about the detail of the Bill's implementation? Under subsection (1), clauses 40 and 319 relate to Northern Ireland, but the other clauses do not. I hope that he will be able to assure the Committee that that will be made crystal clear in the way the regulations are applied, as there is an opportunity for confusion, which could lead to all sorts of other problems as well.

Richard Caborn: I take on board what the hon. Gentleman says. I shall ask my officials to ensure that there is no ambiguity. The position is actually the same as what we have today—the status quo prevails—but I hear what he says. I do not believe that there is any dispute with what we are trying to achieve. He simply wants to ensure that the Bill is crystal clear. I shall ask my officials to reflect on that and determine whether we can make it any clearer.

John Whittingdale: To satisfy my curiosity, I understand that the vast majority of the Bill is a devolved matter for Northern Ireland. The Minister picked out two clauses that will apply in Northern Ireland, one of which is about chain-gifting. I am as concerned about chain-gifting as everyone else, but many other matters are of equal concern; for example,  internet gambling, which we spent some time debating. Why has chain-gifting in particular been selected for application in Northern Ireland?

Richard Caborn: I was going to give my own answer, which is that things can be posted in Northern Ireland. Chain-gifting has been brought in as a new criminal offence to protect the public on a reserve matter. That is why it has been singled out. The hon. Gentleman knows that it was the subject of much concern on the Floor of the House before the Bill was introduced, and I gave a commitment from the Dispatch Box that we would examine the matter seriously, and that is what we have done. That is why we have extended the provision to Northern Ireland.
Question put and agreed to. 
Clause 336, as amended, ordered to stand part of the Bill. 
Clause 337 ordered to stand part of the Bill.

Nick Hawkins: On a point of order, Mr. Pike. I want to refer to what the Minister helpfully said by way of correcting a wrong impression he had given, inadvertently, in response to me on 16 December. While the Minister was speaking, I did not have the chance to look back at what was said in Hansard, because I was not expecting him to provide that correction date. Having done so, I wonder if he, having corrected what he said about Alderney and the Isle of Man and apologised, for which I am grateful, will clarify whether his undertaking to me and the Committee in the short debate on my amendment to clause 310, in which he said that the Government will table a specific amendment on Report to clarify the position of Gibraltar, still stands? I would be grateful if he confirmed that on the record.

Richard Caborn: Yes.

New Clause 1 - Consultation with Commissioners of Customs and Excise

'(1) If in the course of the exercise of its functions the Gambling Commission becomes aware of a matter about which the Commissioners of Customs and Excise are likely to have an opinion, the Gambling Commission shall consult the Commissioners of Customs and Excise. 
 (2) The Gambling Commission shall comply with any direction of the Secretary of State (which may be general or specific) to consult the Commissioners of Customs and Excise.'.—[Mr. Caborn] 
Brought up, read the First and Second time, and added to the Bill.

New Clause 2 - Prosecution: time limit

'(1) A magistrates' court may try an information for an offence under this Act provided that the information was laid within the period of twelve months beginning with the date (or last date) on which the offence is alleged to have been committed.
 (2) Section 127(1) of the Magistrates' Courts Act 1980 (c. 43) shall not apply to an offence under this Act.'.—[Mr. Caborn] 
Brought up and read the First time.

Richard Caborn: I beg to move, That the clause be read a Second time.
The new clause will extend from six to 12 months the time limit for bringing prosecutions of summary offences under the Bill. The time limit for laying any information for a summary offence is set out in the Magistrates' Courts Act 1980. The limit is six months, which may not give the gambling commission or the licensing authorities sufficient time to investigate an offence adequately and take the decision to prosecute. The gambling commission may need to monitor a premises over a period if it suspects that money laundering or serious fraud is being committed. The six-month period is too limiting for that. 
Question put and agreed to. 
Clause read a Second time, and added to the Bill.

New Clause 3 - NATIONAL LOTTERY

'(1) Entering the National Lottery is not gambling for the purposes of this Act (despite section 3(c) but subject to subsections (2) to (4) below). 
 (2) Entering the National Lottery is gambling for the purposes of— 
(a) section 39, and 
(b) section 314. 
 (3) Where entering the National Lottery would also constitute gaming within the meaning of section 6, it shall be treated as gaming for the purposes of this Act if and only if a person entering the lottery is required to participate in, or to be successful in, more than three processes before becoming entitled to a prize. 
 (4) Entering the National Lottery shall not be treated as betting for the purposes of this Act where it would— 
(a) satisfy the definition of pool betting in section 12, or 
(b) satisfy the definition of betting in section 9 by virtue of section 11. 
 (5) Schedule [Amendment of National Lottery etc. Act 1993] shall have effect.'.—[Mr. Caborn] 
Brought up, read the First and Second time, and added to the Bill.

New Clause 6 - Non-commercial betting

'For the purposes of this Act a betting transaction is non-commercial betting if no party to the transaction— 
(a) enters it in the course of a business, or 
(b) holds himself out as being in business in relation to the acceptance of bets.'.—[Mr. Caborn] 
Brought up, read the First and Second time, and added to the Bill.

New Clause 8 - Gambling software operating licence: standards

'(1) The Commission may establish, or provide for the establishment of, standards in respect of the manufacture, supply, installation or adaptation of gambling software. 
 (2) In particular, the Commission may— 
(a) provide for the enforcement of standards by the attachment of conditions under section 71 or 73; 
(b) make arrangements with any person for the establishment of standards; 
(c) make arrangements with any person for the administration of tests of compliance with standards; 
(d) for the purpose of considering whether a condition under section 71 or 73 has been complied with, require the holder of a gambling software operating licence— 
(i) to submit to a test in accordance with arrangements made under paragraph (c) above, and 
(ii) to produce specified evidence of the result of the test; 
(e) for the purpose of considering whether to grant an application under this Part, require the holder of or an applicant for a gambling software operating licence— 
(i) to submit to a test in accordance with arrangements made under paragraph (c) above, and 
(ii) to produce specified evidence of the result of the test. 
 (3) Standards established under subsection (2) may, in particular, be expressed— 
(a) by reference to the opinion of a specified person or class of persons; 
(b) by reference to a specified process or description of software. 
 (4) This section is without prejudice to the generality of sections 71, 73 and 74.'.—[Mr. Caborn.] 
Brought up, and read the First time.

Richard Caborn: I beg to move, That the clause be read a Second time.
The new clause makes an important improvement to the Bill by allowing the commission to set standards in the licences of gambling software companies under part 5. As hon. Members know, many of the gambling products now available depend on computer software that generates images on the screen, such as for internet poker rooms. Software that underpins such games must be tested carefully, and the new clause allows that. I believe that the companies are keen on that. The new clause will allow the commission to mandate individuals to test software, or a random sample of software, and requires licensees to make software available for testing.

Mark Prisk: I have a technical question, but nevertheless an important one. A rogue supplier of software may offer something that can be downloaded remotely. How will the commission be able to regulate a piece of software that people use for gambling, which may have been downloaded from a company far from its control? Clearly rogue software that is beyond the United Kingdom's shores, and therefore beyond the ability to be regulated, offers the greatest danger. Some of the established players, who will be subject to the new clause and the standards proposed by the Government, may feel that they are under a regulatory burden but have to compete with others who do not have to meet the same high standards. Will the  Minister establish for us and put on the record the thinking behind the commission's ability to get to grips with this issue?

Nick Hawkins: My hon. Friend is raising an important point. Does he agree that an issue that we have debated in the Committee, which will come up again later on one of my new clauses, is whether it would be sensible for the protection of consumers to kitemark certain remote gambling sites as British sites and therefore under the commission's control? Does my hon. Friend agree that, if the Government found a way to do that, it might address some of the consumer protection issues that he has rightly raised?

Mark Prisk: As usual, my hon. Friend has made an excellent point. I hope that the Minister will be able to respond to what I suspect is the answer to my question. I am grateful to my hon. Friend.
I am interested not simply in the consumer protection point but in the different standards to which players in this market will have to work and the way in which the Government intend to enforce the regulations.

Richard Caborn: Downloading is covered by the definition. The commission will be able to pursue operators using illegally downloaded software. How it does that technically is up to the commission. I assume that it would bring in experts, because it is a highly technical operation which one would not expect to be set out in a Bill. We believe that the new clause gives the commission the power to bring in the technical know-how. We have made it clear that downloading remotely comes within the definition and therefore would be acted upon by the gambling commission.
We have explored kitemarking, but under European Community laws a kitemarked scheme is against competition policy. However, an operator can advertise that it is licensed by the commission. That is one of the standards that we want to set. The operator would then know that the product conformed to the standard set by the commission and that it is transparent and fair in operation. 
To reply specifically to the hon. Gentleman's point, the rogue operator is acting illegally. We believe that the commission has the necessary powers and resources to tackle the problem.

Mark Prisk: I accept that the Minister will have to ask the commission to put forward its own practical approach to the issue in due course. While we do not expect kitemarking to be included in the Bill, it is important in our discussions that the view of the Minister and the Department are clear. Despite the legal statement that he made, does the Minister see that there is an important merit in the concept underlying a kitemark? Does he agree that it would be beneficial? Without seeking to tie the hands of the commission, does he accept that that concept is one that should be noted in the commission's future actions?

Richard Caborn: What is the difference between a kitemark and a sign on the screen saying that the operator is licensed by the commission? We are saying clearly that licensing by the commission will bring an operator under the commission's standards. The commission will not give licences out without due consideration and will make sure that licences are complied with and policed. It is important that people using products that are licensed by the commission know that they will get a fair deal. From the point of view of the European Commission, kitemarking would be anti-competitive and therefore we will not use it.

Bob Russell: Would it be possible for the commission to use as part of its address or logo a bunch of red cherries or something similar ? That could appear on the authorised licences. It would get round the problem, because I suspect that the problem is relates to national identity and not to a logo of the type that I describe.

Richard Caborn: I do not disagree. If a cherry is symbolic of a licence from the gambling commission but is not seen to be anti-competitive by the European Commission, fine, let us have cherries. What is a kitemark? Is it a cherry, a licence or something else? What I want to make sure is that people know exactly what product they are getting. The point raised was about the cowboys who are trying to infiltrate the marketplace. I believe that the Bill includes enough powers and resources for the gambling commission to be able to act against the cowboys.
Question put and agreed to. 
Clause read a Second time, and added to the Bill.

New Clause 9 - Operating licences: conditions: information

'(1) A condition attached to an operating licence by virtue of section 71 or 74 may require the provision of information of a specified kind to— 
(a) the Commission, or 
(b) another specified person or class of person. 
 (2) A condition attached by virtue of this section may, in particular— 
(a) relate to information about the use made of facilities provided in accordance with the operating licence; 
(b) require a person to provide any information that he suspects may— 
(i) relate to the commission of an offence under this Act, 
(ii) relate to a breach of a rule applied by a sporting or other body, or 
(iii) lead to the making of an order under section 315.'.—[Mr. Caborn] 
Brought up, and read the First time.

Richard Caborn: I beg to move, That the clause be read a Second time.
Although the new clause applies to all operating licence holders, it may be helpful to consider it with betting exchanges in mind. It is essential to ensure that the gambling commission has the teeth to do its job properly. At present, clause 115 requires licence holders to provide information only to the  commission. However, it is essential that betting operators share information with others, including sporting authorities. That information may include details of suspicious betting patterns on an event or the identity of an account holder suspected of having access to inside information about a sport. 
Sharing information is vital if we are to provide adequate safeguards for consumers and protect the integrity of sport. The new clause brings in stringent requirements on betting exchanges, giving the commission the power to force them to surrender information to the relevant authority.

Richard Page: I am grateful for the Minister's explanation. For gaming in this country to advance, we must ensure that we have the cleanest and most open operations in the world. Without that we will not attract the revenues that are out there in the world. I am sure that that revenue will come to this country once people know that we continue to operate a rigorous, open and honest gambling regime.
I ask the Minister to be a little more detailed in his explanation of the requirements for operators to register and to provide details. Will those requirements apply exclusively to betting exchanges or will other gambling operators, such as bookmakers, also be required to release all the names of their credit customers? To what extent will the gambling commission have the power to go into all of those bodies? 
Betting exchanges have created an audit trail that did not previously exist. I welcome that audit trail, and I think that it is to the benefit of racing, although it obviously extends into other areas of gambling. To what extent will the clause influence the regime of following and checking those taking part in gambling?

Richard Caborn: The detail of the requirement is for the commission to settle. I have said many times during the deliberations of the Committee that we are setting up a regulator, and we are giving effective powers to that regulator. The gambling commission has powers and the clause will settle in detail how it uses them. It has clear terms of reference to follow, and will act within them.
The provision is not singling out betting exchanges; it applies to all licences held in gambling and betting. I gave betting exchanges as an example, but the provisions cover all those who are licensed.

Richard Page: The Minister again makes a point that has been a bone of contention and a worry to me. We are giving blanket permission to the regulator inside the gambling commission, and his or her terms of reference will come in due course through secondary legislation. I wonder whether that is desirable. Should we not have on the face of the Bill the limits, controls and powers of the regulator? At the moment, we seem to be giving a carte blanche to the regulator, enabling it to do whatever it wishes subject to regulations following at a later date.

Richard Caborn: That is unfair. What we have done about the powers of the commission is laid out in the Bill. We have included the checks and balances and described where the commission can be challenged if it is deemed to be acting irresponsibly. As the hon. Gentleman said when questioning the new clause, we have to keep integrity in the industry; that is paramount.
Our aim is to translate the 1968 Act into the modern setting, which the Bill will do. At the heart of that process is the integrity of the industry. We are ensuring that the commission has the powers to act in a fast-moving industry in a way that was not possible under the 1968 Act. It is right that we grant those powers, but we must include in the Bill the necessary checks if it is deemed that the gambling commission is acting irresponsibly. 
Question put and agreed to. 
Clause read a Second time, and added to the Bill.

New Clause 16 - Gaming machines: automatic entitlement

'(1) Sections 34 and 226 shall not apply to making one or two gaming machines, each of which is of Category C or D, available for use on premises to which this section applies, provided that the conditions in subsection (2) are satisfied. 
 (2) The conditions are that the person who holds the on-premises alcohol licence sends the licensing authority— 
(a) written notice of his intention to make gaming machines available for use in reliance on subsection (1), and 
(b) the prescribed fee. 
 (3) In this section ''prescribed'' means prescribed by regulations made by the Secretary of State.'.—[Mr. Caborn.] 
Brought up, read the First and Second time, and added to the Bill.

New Clause 17 - Pub gaming machine permits

'(1) A person does not commit an offence under section 34 or 226 if he makes a gaming machine of Category C or D available in accordance with a pub gaming machine permit. 
 (2) A pub gaming machine permit is a permit issued by a licensing authority authorising a person to make gaming machines of Category C or D (or both) available for use on premises to which this section applies. 
 (3) Schedule [Pub gaming machine permits], which makes further provision about pub gaming machine permits, shall have effect.'.—[Mr. Caborn.] 
Brought up, read the First and Second time, and added to the Bill.

New Clause 18 - Removal of exemption

'(1) A licensing authority may make an order disapplying section 264 or section [Gaming machines: automatic entitlement](1) to specified premises. 
 (2) Before making an order under subsection (1) a licensing authority shall—
(a) give the holder of the on-premises alcohol licence (''the licensee'') at least 21 days' notice of the authority's intention to consider making an order, 
(b) consider any representations made by the licensee, 
(c) hold a hearing if the licensee requests one, and 
(d) comply with any prescribed requirements for the procedure to be followed in considering whether to make an order. 
 (3) If a licensing authority make an order under subsection (1), they shall as soon as is reasonably practicable give the licensee— 
(a) a copy of the order, and 
(b) written reasons for the decision to make the order. 
 (4) A licensee may appeal against the making of an order under subsection (1). 
 (5) An appeal under subsection (4) must be instituted— 
(a) in the magistrates' court for a petty sessions area in which the premises to which the appeal relates are wholly or partly situated, 
(b) by notice of appeal given to the justices' chief executive, and 
(c) within the period of 21 days beginning with the day on which the appellant receives a copy of the order against which the appeal is brought. 
 (6) On an appeal the magistrates' court may— 
(a) dismiss the appeal; 
(b) allow the appeal and quash the order made by the licensing authority; 
(c) make an order about costs. 
 (7) In relation to premises in Scotland— 
(a) subsection (5)(a) shall have effect as if it referred to a sheriff within whose sheriffdom the premises are wholly or partly situated, 
(b) subsection (5)(b) shall not have effect, 
(c) the reference in subsection (6) to the magistrates' court shall have effect as a reference to the sheriff, and 
(d) the reference in subsection (6)(c) to costs shall have effect as a reference to expenses. 
 (8) In this section, ''prescribed'' means prescribed by regulations made by the Secretary of State.'.—[Mr. Caborn.] 
Brought up, read the First and Second time, and added to the Bill.

New Clause 19 - Inspection: powers of entry: person accompanying inspector, &c.

Brought up, read the First and Second time, and added to the Bill.

New Clause 20 - Premises licences: specific cases: casino premises licence: overall limits

'(1) No more than eight casino premises licences may have effect at any time in respect of regional casinos. 
 (2) No more than eight casino premises licences may have effect at any time in respect of large casinos. 
 (3) No more than eight casino premises licences may have effect at any time in respect of small casinos. 
 (4) The Secretary of State shall, having consulted the Scottish Ministers and the National Assembly for Wales, by order make provision for determining the geographical distribution of casino premises licences within the limits specified in subsections (1) to (3); for which purpose the order shall— 
(a) specify which licensing authorities may issue casino premises licences of a specified kind, and
(b) in respect of each specified authority, specify the number of casino premises licences of each kind issued by the authority that may have effect at any time. 
 (5) An application for a casino premises licence may not be made to a licensing authority if subsections (1) to (3) and the order under subsection (4) would prevent the authority from granting the application. 
 (6) An application for a provisional statement may not be made to a licensing authority if it relates to a casino and is made at a time when subsections (1) to (3) and the order under subsection (4) would prevent the authority from granting a casino premises licence in response to an application made in reliance on the provisional statement. 
 (7) Schedule [Applications for casino premises licences] (which makes provision about the treatment of applications for casino premises licences and provisional statements) shall have effect. 
 (8) The Secretary of State may by order— 
(a) amend any of subsections (1), (2) and (3) so as to substitute a new maximum number of casino premises licences; 
(b) repeal any of subsections (1), (2) and (3).'.—[Mr. Caborn.] 
Brought up, and read the First time.

Richard Caborn: I beg to move, That the clause be read a Second time.

Peter Pike: With this it will be convenient to take Government new schedule 3—Applications for Casino Premises Licences.

Richard Caborn: New clause 20—[Hon. Members: ''It is the one about 8,8,8.''] I remember and I will answer the 8,8,8 question. It is unfortunate that my hon. Friend the Member for West Ham (Mr. Banks) is not present. It does not matter about getting on quickly, because it will take him a long time to get back here from where he is. He is over the pond, as they say.
In my statement on 16 December last year, I made it clear that the Government had listened to the concerns expressed by the House about our proposals for new casinos. I acknowledged that the proposals in the Bill represented a significant change in the nature and scale of casino gambling in Britain. We have therefore decided that we need to take a more controlled and cautious approach to the introduction of the new types of casino provided for in the Bill to ensure that they can be operated without increasing the prevalence of problem gambling. In our sitting on 16 December, I said that I hoped to table new clauses and schedules on the Government's casino policy before the Christmas recess. I was glad to be able to do so on 20 December. I hope therefore that members of the Committee have had plenty of time over the Christmas break in which to study them closely. On 20 December, I also sent Members on the Committee the text of those amendments that could not be tabled because they amended clauses that the Committee had already agreed. I hope that that was also helpful. If the Committee approves the new clauses and schedules that are being debated today, we will table the further amendments on Report. 
We had an interesting and wide-ranging debate during our sitting on the last day before the Christmas break. I appreciate that it was difficult for the Committee to reach a comprehensive view without sight of our amendments, so, with the Committee's  indulgence, I shall offer a detailed explanation of what new clause 20 and new schedule 3 achieve and why I think they represent a prudent way forward for the public and the casino industry alike. 
New clause 20 is the key to controlling the proliferation of casinos in the country. It prevents there from being any more than eight new casinos of each of the three types provided for in the Bill.

Don Foster: The Minister says that the new clause prevents more than eight new casinos in each of the categories. Can he explain why the word ''new'' does not appear in the new clause?

Richard Caborn: No, I cannot, but I will look into that question when I have finished making my point.
Until Parliament decides otherwise, when the new regime comes into effect there will be a maximum of 24 new casinos in Great Britain.

Bob Russell: Does the Minister accept that, although 24 does not sound a lot numerically, the number of gaming machines that will be accommodated primarily in the super-casinos will represent an increase of something like 800 per cent. on current provision?

Richard Caborn: I do not know whether that figure is correct when one takes into account the number of gaming machines now present in pubs, clubs and casinos. However, I accept the general point. Anybody who wants to work it out can do so because the number of gaming machines per establishment is absolutely clear. In the light of our experiences in Australia, we have tied machines either to an establishment or to the number of tables. There will be a clear link between the number of machines and the operation of gambling in this country, if the Bill is enacted. The provision is in the Bill, so anyone who wants to make a calculation they can do so.
It is a clear policy decision not to allow machines to proliferate. The hon. Gentleman is right: the issue is not purely one of casinos; the important part is how we control the number of gaming machines. That is what I believe we have done in the Bill. I do not know the actual figures, but no doubt somebody will calculate them.

Kevan Jones: Just for clarification, the provision mentions no more than eight premises per licence. Does that include existing premises, for example bingo halls and smaller casinos, converted to larger casinos, or does it refer to brand new casinos separate from existing bingo halls that want to convert to casinos?

Richard Caborn: If my hon. Friend allows me to explain a little more, I will answer his questions and come to the point about the 130-odd casinos—there is a debate about whether the number is 135, 136, 137—plus the 24 new ones. The number is important if we are to place at the centre of the Bill the need to test what happens as the new casinos are introduced so that people are secure in the knowledge that problem gambling will not proliferate. That is at the heart of what we are doing, because, as I said in my opening  remarks on the clause, we have reflected on the arguments advanced on Second Reading and on the representations made to the Government.
Until Parliament decides otherwise, there will be an absolute maximum of 24 new casinos in the new regime. That is achieved in new subsections (1), (2) and (3). Members of the Committee had some seasonal fun and the Tories started before I got to my feet talking about the figure eight and the reasons for its selection. It is a decision based on the exercise of judgment, not on any precise, irrefutable scientific process, or on going to the Library to find out what the definition of eight is. There is no mystical significance to that number. We wish there to be a reasonably large number of each type of new casino so that the impact can be assessed in a range of areas and types of location that might be suitable. We think that a limit of eight each is a reasonable number to achieve the aim while ensuring any risk of problem gambling is minimised. 
Some members of the Committee said on 16 December that there was no need for concern about small and large casinos, because there are plenty operating and they present no problems at all. The Government believe that that is incorrect. Small and large casinos under this Bill will be very different from those operating now. They will be bigger and offer new combinations on a large scale. All can offer eight to 15 times the maximum number of jackpot gaming machines offered in casinos now; large casinos will be able to offer betting and bingo in addition to casino games; and small casinos will be able to offer betting. The facilities will be appreciably bigger and different from those now on offer, so we must be cautious in our approach to their development. 
I have also heard it said that it is unfair that the existing casinos will not be able to benefit from the full range of commercial rights that new small and large casinos will have. Again, I think that is incorrect, even though I acknowledge the disappointment that the operators feel. The reasons for imposing a limit on the new types of casino is because of the social risk that they pose, and that is true of small and large casinos, too. We propose to test limited numbers to minimise the risk. That cannot be achieved by testing as many as 150 casinos. If we did not impose the restrictions that we have, and gave the same rights to the 136 casinos currently operating, it would bring the total of new-style small and large casinos to about 150. 
If an existing casino is one of the up to 24 areas selected by the Secretary of State, it may apply to operate one of the new-style casinos like any other applicant. We also needed a comprehensive solution because we had to acknowledge the implications of setting an initial limit on the number of regional casinos. If we had not done that and did nothing to control the number of small and large casinos, there would inevitably have been a market reaction and the risk of a large overall increase in the number of casino premises. 
Subsection (4) of the new clause requires the Secretary of State to determine by order where new casinos can be licensed. Premises licence applications to licensing authorities that have not been specified by the Secretary of State will not be allowed. To assist the Secretary of State in that decision, if the Bill gains Royal Assent we will appoint an independent advisory panel to recommend areas for regional, large and small casinos. Obviously, the members will need a range of experience in, for example, casino regulation, problem gambling and economic development issues. The advisory panel will be asked to identify a good range of types of area, with a good geographical spread across Britain. Subject to those primary criteria, the panel will be asked to choose areas in need of economic development and likely to gain regeneration benefits from a casino. It will be important for the advisory panel to take into account the broad locations being identified in the emerging work on regional spatial strategies, which we hope will become available during 2006.

Joan Humble: The Minister is making an interesting point about where the sites will be located. Will the criteria under which the independent advisory panel operates be published? If so, at what stage? Will everybody have a clear idea of how it operates?

Richard Caborn: The criteria will be published. The process will be open and transparent to the public. That will be laid out by the Secretary of State.

Mark Prisk: The Minister referred to the regional spatial strategies that the Office of the Deputy Prime Minister is driving forward. Could he confirm that significant development and redevelopment measures may emerge because of the new casinos and, therefore, that they will have a significant and important effect on the strategies, which clearly would need to be amended? The regional spatial strategies will affect many other issues such as housing and transport, and it would be helpful if he would clarify that they will have to be amended once the Secretary of State for Culture, Media and Sport has agreed to new casinos. Does the Minister agree that the strategies would need amending?

Richard Caborn: Not necessarily. The regional spatial strategies are under consideration now and authorities will be asked to consider whether their strategy should include a regional casino. That would be quite permissible. They work very closely with the regional development agencies at regional level—such things do not stand in isolation. Consideration of the strategies includes economic development, transportation, housing and recreation, and casinos would be part of the strategy.

Mark Prisk: The Minister will know that the east of England plan is out to consultation as we speak. Let us say that Great Yarmouth is chosen—I show no particular preference—after consultation on the plan ends in March this year. There is a danger that the plan would go forward and have to be amended after the public consultation. Can the Minister confirm that an adjustment such as a major casino in a town within the regional spatial strategy would require the strategy to be amended to reflect that significant change?

Richard Caborn: If the plan had been out for consultation and the whole of the consultation had finished, yes. I must admit that I am not au fait with the timing of the spatial plans—as the hon. Gentleman knows, that is an ODPM matter—but I shall take his point on board. Previously, any additions to regional planning have gone out for further consultation, and I imagine that the same criteria apply. I hope that if the Bill is on the statute book before any of the spatial plans are passed by the ODPM, they can be amended in that consultation process. However, I shall take the point on board, because the east of England spatial plan will probably be the first to be put in place. I shall look at the timing and ensure that we come back with an answer.
Subsection (4) of the new clause also requires the Secretary of State to consult Scottish Ministers and the National Assembly for Wales before making decisions on the location of new casinos. Both devolved Administrations have a major role in land and economic development, as well as in local government, so it is important that they are consulted. 
Subsection (8) allows the Secretary of State by order to vary the limits on the new casino categories or lift them altogether. That is what makes our new proposals a test rather than a permanent cap. We have said that the Government will ask the gambling commission to advise on the impact of the new types of casino no sooner than three years after the award of the first premises licence. We believe that such a period is necessary to ensure that a full assessment can be made. We will keep an open mind on the most appropriate moment to assess the impact. If only a couple of new casinos are open after three years or if casinos are not open in a good mix of locations, it would be foolish to try to make a decision on the basis of a small sample. We want to be sure that our decisions are based on a good spread of casino locations and types and a fair overall number. I do not say that in the expectation of any extension of the  initial period, but the Government must make decisions about further expansion on the basis of firm data. 
If, with the advice of the gambling commission, the Government decide to propose that it is safe to allow more casinos to be licensed, that decision will need the approval of Parliament. That is set out in subsection (8) and again reflects what Parliament said on Second Reading.

Julie Kirkbride: Am I right in thinking that, even if only one or two casinos are operation three years after the commencement order, the Government may, in their wisdom, decide that that is enough to make an assessment and say ''These casinos are okay''? As a result, instead of the eight promised, we could then have the 30, 40 or 50 envisaged in the Government's original Bill. Is the provision not just a fudge to get where they wanted to be in the first place and avoid Parliament's views?

Mark Prisk: Very shrewd!

Richard Caborn: Not at all. It is not particularly shrewd either. I have said that we would want a good spread and fair numbers to make the decision.

Julie Kirkbride: How many?

Richard Caborn: As many as the commission believed was right for it to make a sensible decision, but at the end of the day the safety valve is Parliament. As I said, Parliament will say whether there will be an extension. I have just said that and it is clearly laid out in clause 20, which the Committee debated. That gives the reassurance that the House sought on Second Reading.

Julie Kirkbride: As the Minister has been an MP longer than I have, I am sure that he will be able to help me with this question. When he says that Parliament will be consulted, will it be in a Standing Committee, whose members are chosen by the Whips, or in the full House, where we can all have a say?

Richard Caborn: It will be the full House; it will be Parliament that decides. It will be both Houses of Parliament, if there are still two Houses of Parliament when the matter comes to be discussed. Parliament itself will make the decision.

John Whittingdale: That sounds all very well and good, but may I pin the Minister down? Is he saying that the vote will take place on the Floor of the House?

Richard Caborn: Yes, on an affirmative resolution of the House.

John Whittingdale: That is not the same thing.

Richard Caborn: Yes it is. It takes place on the Floor of the House.

John Whittingdale: Will there be a motion debatable by the full Chamber of the House of Commons?

Richard Caborn: Yes, that is the intention. We want to give the House responsibility for an extension. We think that that is very important. If the hon. Gentleman has concerns, he can raise them. We believe that we have covered the matter under clause 20.
Mr. Foster rose—

Richard Caborn: Just let me answer the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale). We are reflecting what was said on Second Reading. The Secretary of State made it absolutely clear that if there is to be any movement from what is set out in the Bill, we shall carry out a proper assessment. We are not in the business of trying to out-manoeuvre people. We are dealing with a very serious issue, which is why we are doing what we are doing. When the 24 casinos are up and running, the new gambling commission will make an assessment, which will go back to the House. The House will then decide whether it wants to move the process forward. It would be stupid for any Government not to take into consideration the position of Parliament.

Don Foster: I am grateful to the Minister for giving way, and a happy new year to you, Mr. Pike.
To be helpful to the Minister, I note that subsection (8) of new clause 20 commences: 
 ''The Secretary of State may by order''. 
It is the normal convention of the House that an order would be considered by a Committee. There are different types of order, but it would normally go to a Committee rather than to the Floor of the House. If the Minister is saying that the provision is to be an exception to the rule and will be dealt with on the Floor of the House, will he assure us that ''order'' is the correct word? In my limited experience, which is nowhere near as extensive as the Minister's, I have never known an order to be considered on the Floor of the House.

Richard Caborn: First, orders have been debated and voted on in the House—

Richard Page: The Minister has made some quite remarkable statements. I have to ask him about the authority by which he makes them. Has he got permission from and the agreement of the Leader of the House so that if the Labour Government are fortunate enough to win a second term—[Hon. Members: ''Third term.''] Does the Minister have the authority to state that there will be a debate on the Floor of the House? Has he already cleared that point with the Leader of the House?
In addition, many orders have a time limit. Would there be a move to increase that limit so that there can be a full, proper debate, not one of these one-and-a-half hour truncated affairs?

Richard Caborn: I cannot determine what will happen on the Floor of the House in three, four, five or six years' time.

Richard Page: You just did.

Richard Caborn: All we are doing is laying down the formula. It may well be that a decision is taken not to move forward with the process, or the House may argue that it does want to move it forward. There may be all sorts of circumstances. I am saying very clearly what the Secretary of State said on Second Reading in response to several expressions of concern about how the project will move forward. We will move it forward on the basis of an informed debate, based on information gathered by the gambling commission three years after the opening of the casinos. we shall bring that to the House of Commons and Parliament to be determined by an affirmative resolution, and I believe it would be the intention of the day to have that debate on the Floor of the House. I can go no further than that because a Government of our persuasion might not be in power six, seven or eight years from now.

Estelle Morris: Shock, horror!

Richard Caborn: Indeed. Those are the conditions that we have set out, and we have tried to cover them in clauses 332 and 20.

John Whittingdale: Before we leave this point, it is important to state that what the Minister just said does not sound quite as firm a commitment as the one he seemed to give about two minutes ago. Obviously it is dependent on his party being in Government, but as the spokesman for a Labour Government he said clearly in his initial remarks that any debate on the order would take place on the Floor of the House. He now appears to introducing an element of doubt. Will he say that, as the spokesman for the Government on the matter, he will bend every sinew to make sure that the motion is debated on the Floor of the House of Commons and not rubber-stamped in a Committee?

Richard Caborn: All I can say is that if the controversy about extending casinos is similar to that about introducing them, any Government would have to be stupid not to ensure that the matter was debated on the Floor of the House and would not take public opinion with them. We have got to do that.
I know that one can make political gestures that we had on the Floor of the House, but we have reflected on what was said on Second Reading and on the representations that were made. To be honest, we have also had discussions with Front-Bench Members of the Opposition parties to make sure that we bring in a piece of legislation that is workable and commands a broad consensus. That is why the Bill went to the pre-legislative scrutiny Committee. I reflect what the Secretary of State said. I cannot determine what the Leader of the House will do in six or seven years time, but I believe that the matter ought to be debated on the Floor of the House. That is why that we choose to require that the affirmative procedure be used. 
New clause 20 brings into effect new schedule 3, which sets out the process for awarding premises licences for any of the new categories of casino where a limit has been imposed on the number of licences of that category that may be granted. The first step that  the licensing authority must take is to invite applications in accordance with any regulations made by the Secretary of State under paragraph 2. Where the number of applicants exceeds the number of available premises licences, a two-stage process will be used to decide who is awarded a licence. Our expectation is that there is likely to be a two-stage process in all areas. 
Paragraph 4 describes the first stage, which is a regulatory test to ensure that applications satisfy the regulatory premises licensing requirements in the Bill. Paragraph 5 describes the second stage, which applies when the number of applicants who have passed the regulatory test is greater than the number of licences that the local authority is permitted to grant. The second stage will be a competition held by the local authority to determine which of the competing applications would bring the greatest benefit to the local area. That competition could be judged on a range of issues, reflecting those that are important to the area. Those may include, for example, employment and regeneration, the design of the proposed development and financial commitments by the developer to local projects. Local authorities will set out their priorities and concerns and will then invite operators to submit entries to the competition. 
The Government think it best to give local authorities a large degree of discretion about which benefits would be most suitable for their area. We do not think it helpful for the centre to be prescriptive about the requirements, because we are not best placed to judge local circumstances and because I am more than confident that local authorities will be able to develop comprehensive and ambitious strategies that will benefit their local communities. As my hon. Friend the Member for Blackpool, North and Fleetwood (Mrs. Humble) pointed out, some local authorities have done that and their plans are at an advanced stage. 
The winner of the competition will be granted a premises licence or a provisional statement. If a provisional statement is granted, the operator will be eligible for a full premises licence once the casino has been built. Paragraphs 8 and 9 make provision about the issuing of provisional statements, including allowing licensing authorities to set a time limit on the duration of a provisional statement. A time limit may be necessary to prevent a licence holder from holding on to its licence without using it in order to prevent competitors from being able to open a new casino. 
Paragraph 6 obliges local authorities to follow a code of practice issued by the Secretary of State about how the second-stage competition should be run. That code will be important to help ensure that the local authority manages the process properly and objectively. We will consult the Local Government Association and others in due course before issuing the code. 
In my explanation of the competition process, I hope that I have made it clear that it is the local licensing authority that will make the decisions about which operator to select. The key point for local authorities and local communities is that the casino  operator will have to convince local authorities that its is the best proposal for the community in accordance with the stated objectives of the local authority. 
My hon. Friend the Member for North Durham (Mr. Jones) was concerned that casino companies could use the new system to play authorities off against one another. I hope that he is now reassured that the opposite is the case and that local authorities will have the gift of a licence while a casino operator will have to earn it.

Kevan Jones: Will my right hon. Friend clarify a point? What would prevent a casino operator from selling or changing ownership of a licence before the casino was built?

Richard Caborn: Whoever they were selling to would have to have an operating licence from the gambling commission. That would be a commercial deal, and it would be discussed with the various operators and people concerned. It would be a normal commercial transaction.

Kevan Jones: So, a casino operator with a premises licence would have a commercially saleable product. I accept my right hon. Friend's point that it would have to be sold to another casino operator, but the provision is creating a product with quite a lot of value.

Richard Caborn: Very much so. It will be for the local authority to ensure that it gets that value from the negotiations between it and those who hold the licence. The panel will make a decision for a regional casino in area X. Those who want to will bid in the competition and it will up to the local authority to award the premises licence. The local authority will determine what it wants for its community, and when the premises licence has been issued, whoever takes it on will have to deliver what was agreed when it was granted, whether to operator A or operator B.

Nick Hawkins: As the Minister knows, I and many other Committee members, not least Labour Members, have been concerned about ensuring that we get the regenerative effects of any new casino development. I want to hear him say that there is a mechanism whereby a local area, such as Blackpool, will have some guarantee of getting the regenerative benefits of what the Government are doing. The Government seem to be handing over the third revision of the Bill with no guarantee that the regenerative benefits that so many members of the scrutiny Committee wanted to be achieved will flow from the legislation.

Richard Caborn: I must stress yet again that we are doing what we are doing to ensure that we approach the development of such casinos cautiously, mainly because of social responsibility. There is no doubt about that and that is why the gambling commission is the first port of call in giving licences to ensure that fit and proper people operate a licence. Beyond that, and as I made absolutely clear when moving some amendments this morning, that regeneration will be  subject to local authority negotiation, and there are no better people to negotiate such regeneration and decide who should have one of the 24 licences. Anyone who gets one of the eight regional licences will be in a competition, which will, to a large extent, be conducted by local authorities. I have said that we will discuss with the Local Government Association and others how to implement those criteria to ensure that it is transparent and fair.

Nick Hawkins: The point that I have made to the Minister—not just once, but on a number of occasions—is that surely in this overarching legislation that is creating the new structure, it is for the Government to provide the mechanism by which local authorities can get the money. Given his answers to the hon. Member for North Durham, when a company has satisfied the basic minimum requirement of being a fit and proper company—I see the hon. Gentleman nodding—the whole thing can be shifted to another company that may be fit and proper but has no intention of providing the regenerative benefits. That is the difficulty. By failing to provide a mechanism in the Bill to ensure that the money goes to regeneration, the Government have sold the pass. They are handing the whole problem over to local authorities.

Richard Caborn: The hon. Gentleman has totally misunderstood what I said. I am saying that the local authority will give a premises licence or a statement of premises licence, which will contain all sorts of conditions that I have just outlined and may include regeneration or investment. It is best for the local authority to do that by way of a competition. The criteria will be clearly laid out by the local authority, the negotiation will go ahead and whoever has signed up to operating the premises licence will have to deliver. That is why I said earlier that the premises licence might not be granted totally until the project is up and running. That provides the added leverage—an added stick—to ensure that the project is completed. Whoever takes responsibility for the licence will have to carry out that work.

Joan Humble: I want to clarify one point. As I understood the Minister's earlier comments, the independent panel will be working against criteria that include economic regeneration as a key element. In allocating the eight licences for the regional casinos, the panel will look at economic regeneration; take cognisance of the regional spatial strategy; and make recommendations to the Government, who will determine where those eight regional casinos will be. With the key aspect having already been identified by the panel and the Government as economic regeneration, the local authority will then examine the competition to ensure that it maximises that benefit. Have I painted the right picture?

Richard Caborn: My hon. Friend is absolutely right. There will be a written agreement, as stated in paragraph 5(3)(b) of new schedule 3. The authority 
''may enter into written agreement with an applicant, whether as to the provision of services in respect of the authority's area or otherwise''. 
There will be a written agreement, whoever is the operator. If there is a sale from one operator to another in the intervening period, as long as they are licensed by the gambling commission and take on the full conditions on which the premises licence has been issued, the sale will be permissible.

Kevan Jones: I have to say that in my experience that approach is fine in the purest sense, but in practice once somebody has a premises licence, they have a marketable commodity that they will sell for a large sum of money. They will have created a valuable asset, which might be worth millions of pounds. I accept that they might wish to pass it on or transfer it to somebody with a casino who is approved by the commission, but in reality and from my experience, if the new operator says, ''We cannot afford to do X, Y and Z,'' a gun is held to the head of the local authority, which has to take it or leave it.

Nick Hawkins: That is the real world.

Richard Caborn: The real world is what it is. In the real world, the competition for eight regional casinos will be pretty intense. If the reaction caused by us limiting that competition is anything to go by—people want more than that number—there is no doubt at all in the real world that eight regional casinos are going be pretty successful as a product in the marketplace in Britain.
We can debate that until the cows fetch us, but quite honestly, one makes a judgment based on reality and, looking around the world to where that type of regional casino has been operating, one finds that they are quite profitable. A great concern of the House and the country was that to allow this process to move too quickly might create a lot of problems. We have made the process more potent, not less, in terms of its ability to regenerate and be a financial entity in its own right in the real world.

Kevan Jones: I accept the point regarding the Valhalla in which the Minister lives, but I am concerned to ensure that if someone gets an operator, they do what they are supposed to do. I am sorry, but in practice they will not do it. My right hon. Friend should consider ways to tighten up the process to ensure that what operators offer is delivered. I can see it now: local authorities will face a licence being passed on or sold to another operator, who might suddenly come back to the authority and say, ''Sorry, but we can't afford to do this.'' The authority will have no option but to accept it. My right hon. Friend might want to tighten up the legislation if he wants to ensure that regeneration is the effect of what he is proposing.

Richard Caborn: On the transfer of conditions, in any commercial deal, the laws of the nation and company laws are laid down. I do not believe that a set of bandits, rather than responsible companies, are operating here. To get a licence through the gambling commission, companies will have to acknowledge their corporate and social responsibilities and show that  they are fit and proper persons. They will be major companies, not fly-by-nights. If they decide to take over a premises licence, they will have to take over the conditions entered into by the original signatory. I do not believe that such companies will start reneging on those deals. I cannot guarantee that absolutely, but companies entering contractual arrangements with a local authority or a private company can be dealt with through various company laws and the courts of this land.

Kevan Jones: The Minister might want to give the commission power over the transfer once an operator gets its premises licence. If a licence is going to be transferred to another company, the commission might want a veto of some kind over that. At least that would protect what he is trying to achieve.

Richard Caborn: I do not know whether that would be the right way forward. If there are good reasons for a premises licence being transferred transparently and in a proper commercial way to deliver what the local authority agreed with the original licensee, I see no reason to impose further constraints to stop it. It might be a proper commercial deal that benefits the local authority and others, so we should be extremely careful.
I believe that the safeguards and procedures that we have included in the various stages of the licensing process give adequate comfort to local authorities and the gambling commission. If people transgress, contractual and company laws outside the Bill will ensure that local authorities can get what they deserve.

Julie Kirkbride: I want to be absolutely clear that I understand what the Minister is proposing, so it will be helpful if I tell him what I think he is proposing and he tells me where I am wrong. Is he proposing that the new commission will decide which areas and local authorities get the precious eight regional casinos and then decide which of the operators is to be granted a licence in those areas, or will he allow operators to be granted a licence and then bid to the local authorities to determine who will be given one of the eight casinos? Who will be in the driving seat of allocating the casino operator to the local authority, and what conditions will be set?

Richard Caborn: The hon. Lady is not quite right, so I shall explain the procedures again. To start on the road of operating a casino in this country, someone will have to get a licence from the gambling commission, which will be given to a fit and proper person in terms of their social and corporate responsibility. In parallel with that, a panel will determine where those 24 licences should be granted against criteria of regeneration and after consulting the regional development agency, regional spatial strategies and others. That panel will come to a decision for the 24 sites for regional, large and small casinos.

Julie Kirkbride: Not local.

Richard Caborn: Wait a minute. Against the criteria laid down, the panel will decide where those sites will be and make recommendations to the Secretary of State. The Secretary of State will say yes.
It is always dangerous to name names, but let us say that eight regional licences are determined for sites A, B, C, D, E, F and so on. The local authority—let us say it is Birmingham—will get a licence in its planning area. It can then invite any one of those who have received a licence from the gambling commission to make a bid. It will have laid down transparent criteria for what it wants for offering a regional casino licence to one of those bidders, who will bid against those criteria. 
The local authority will have the power to give both planning permission under section 106 and a premises licence. There will be a negotiation about that. There are three separate things. The first is a licence to operate, which will come through the gambling commission. Alongside that, the panel will meet and determine against the criteria where the 24 licences ought to go. Its decision will go to the Secretary of State, who will inform the local authority that it can develop a regional casino. The local authority will have the powers relating to planning and the premises licence to be able to negotiate with those who want to bid. That is the procedure. It is quite simple, and I think it is pretty clear and transparent.

John Whittingdale: I want to follow up the point made by my hon. Friend the Member for Bromsgrove (Miss Kirkbride). Is the Minister saying that, when the panel identifies the 24 areas where the casinos will go, it will specifically nominate local authority areas? In other words, if the panel decides that Chelmsford will be blessed with a regional casino, it will have to be in the borough of Chelmsford, not the district of Maldon, which is right next door.

Richard Caborn: It will be the local authority, because it must give the planning permission and the premises licence. That local authority area, with planning permission, will be designated as the authority to invite those who want to bid to do so.

Bob Russell: Will the local authority have to apply to be considered or will it be told it has been chosen?

Richard Caborn: I have no doubt that, in the real world that we live in, the members of the panel, who are sensible people, will get a real feel for who wants a casino. If the Lobby of the House of Commons is anything to go by, I can assure the hon. Gentleman that there are a lot of contenders out there. It is amazing how many people said on Second Reading that they did not want casinos, but by God, the comments I have heard in that Lobby in the last few weeks suggest that more casinos would not be a problem. Make no mistake about it.

Richard Page: May I give the Minister some encouragement? The process that he has outlined today is almost exactly that employed in France. The  French Government give a specific authority the ability to grant a licence. The authority takes in the bids, finds the benefits and takes things forward.

Richard Caborn: That is news to me. It is always interesting to know these things. We are following the French on this, but I hope they will be following us on the 2012 bid.

Don Foster: I agree entirely with the Minister's final remark. I want to ask again for clarification of a point raised in our deliberations just before Christmas. My understanding is that the competition will be for the premises licence—it clearly will not be for planning permission—yet in normal circumstances the planning gain comes in a deliberation in respect of the planning application. We then get into the question of section 106 agreements as amended by the Planning and Compulsory Purchase Act 2004.
We know that, under the planning legislation, local authorities are not allowed to make excessive gain from a planning application. Therefore, this major regeneration benefit will come only through a mechanism that allows a local authority to make bids in a form beneficial to its area as part of the competition for the premises licence. Will the Minister confirm, first, that I am correct on that? Secondly, if I am, will he also confirm that his staff have checked that there will be no problems in that respect in relation to competition law?

Richard Caborn: The answer to the last question is yes. Our lawyers say that what we are doing is absolutely within competition law. That is not to say that there will not be some gain from applying for planning permission, but, as the hon. Gentleman will readily accept, it is limited. We have introduced the premises licence, so that the true economic gain can be obtained from such a development. The two things are separate, and we have introduced the premises licence because the integrity of the planning laws must be maintained. That is why planning will be done separately. Nevertheless, there can be planning gain under section 106, although it will be limited in scope. The real economic gain could be achieved by the premises licence.

Kevan Jones: Could I not apply for planning permission without having a premises licence? What would the criteria be for a local authority, if, for example, I set up a company but did not have a premises licence and wanted to apply for planning permission? It seems that there is nothing to stop anyone doing that. As part of the process, will the council have to designate the site in advance, or will it just be a geographical area? I can envisage a situation in which people will appeal against refusal of planning permission for perfectly legitimate projects that meet planning regulations, on the grounds that they do not have a premises licence.

Richard Caborn: If anyone wants to apply for planning permission for anything, they can do so—if they are daft enough to spend a lot of money doing something that they know will not materialise, they can apply for planning permission. Indeed, there are local authorities that have granted planning permission for casinos in the full knowledge that a licence will be needed to operate them. I have said before that I think every football club—certainly every premier division and every first division football club—and many rugby clubs have already been examining development in terms of casinos. They are entitled to do that, but that does not necessarily relate to what I am doing in terms of putting legislation on to the statute book.

Kevan Jones: I would not be daft if I applied for planning permission, because if it was granted I would have a marketable commodity with an actual value to a whole range of operators who would potentially have licences. I do not accept that the two can be knitted together as the Bill envisages.

Richard Caborn: We can debate this, but the local authority may decide that it does not want such development in a particular area, because it will not deliver the regeneration that it wants. It might be more selective in relation to a site where the premises licence is conditioned not by planning but by economic gain. The authority might say, ''You asked for planning permission for that site and we have given it to you, but that is not our preferred site. Our preferred site is this one for these reasons.'' It is entitled to do that with the premises licence.

Nick Hawkins: Will the Minister give way?

Richard Caborn: Yes, but I want to finish speaking to the new clause.

Nick Hawkins: The Minister was critical of organisations such as rugby and football clubs that have already put in planning applications. However, they did so because they believed all the promises that the Government had made up to and including Second Reading, before their series of massive U-turns. Those organisations were not being stupid; their only stupidity was in believing that the Government would follow through on what they had been saying for months, throughout the scrutiny Committee process and through the passage of the legislation until midway through the Standing Committee proceedings, when they went into reverse.
The hon. Member for North Durham, with all his experience of the local authority world, clearly takes the same view as me, that developers quite frequently change the goalposts in the middle of a negotiation and hold pistols to the head of a local authority. Would it not therefore be a much greater guarantee of regeneration, instead of leaving the whole issue to be negotiated between the potential operators and local authorities, the Government included a specific  mechanism in the Bill that gave the local authority the opportunity to get those regenerative benefits? That would put the local authorities in a much stronger negotiating position to guarantee those benefits.

Peter Pike: Order. The Minister said when he gave way that he wanted to finish speaking to the new clause. I recognise that we are discussing an important point, but hon. Members will have the opportunity to debate the new clause when the Minister has finished. I will therefore support the Minister if he resists giving way too many times.

Richard Caborn: To answer the last intervention, if anything has put local authorities in a stronger negotiating position it is the limitation to eight regional, eight large and eight small casinos. There is no doubt that it is a seller's market. I cannot tell local authorities what to do, but I have every confidence that they will be able to extract what they want from the process. The key point is that the casino operator will have to convince the local authority that its proposals are the best for the community, having regard to the authority's stated objectives. My hon. Friend the Member for North Durham was concerned about that point, but I hope that I have reassured him and that my explanation of the system will also reassure members of the Committee who are concerned about the risk of legal challenges to local authorities. The Bill will give authorities a foundation to run a competition on the basis of benefits to their areas. As long as local authorities act reasonably, they will have wide discretion to seek benefits for their areas.
The proposals offer a balanced and cautious approach to the introduction of the new legislative framework for casinos. They represent a significant shift from our position on Second Reading. That shift has happened because we have listened. On Second Reading, hon. Members on both sides of the House asked us to put in place a stricter regime. We have done that in a way that puts public protection above all other interests, whether commercial or those of local authorities. The proposals allow us to secure economic and regeneration benefits while ensuring that we can maintain Britain's good record on problem gambling.

Don Foster: The Minister rightly refers to the existing very good record, so it is important that we consider existing businesses. I am, I confess, one of those who did not spend the entire Christmas period reading the information that the Minister sent us, so I must have missed something somewhere, but will he explain what will happen to existing casinos? Clause 7 makes it clear that there will be four categories: regional, large, small and below the minimum size for a licensed casino. I think that the whole Committee understood during debate on that clause that all existing casinos would be confirmed as being in one of  those four categories. However, as new clause 20 does not refer to new casinos, we are now talking about having only eight regional, eight large and eight small casinos. Presumably that leaves all the rest as they are, with none of the benefits from the changes made. Will the Minister clarify that there will now be no changes in the designation, categorisation or naming of existing casinos, whether we are talking about 130 or, as he said today, 137?

Richard Caborn: I say that there are between 135 and 137 casinos because no one is clear on exactly how many we have; it depends who is asked. There are two ways in which things will change for the 130 or so casinos in this country: the 24-hour rule will go, and they will be able to advertise. Beyond that, they will not get the commercial rights of small and large casinos that I have just explained, because they will be able to take betting and bingo in some cases, and betting in others—there will be an extension of that. There are four categories of casino: regional, large and small casinos and the 130-odd that are operating now, which will have new commercial rights in the sense that there will be no 24-hour rule and they will be able to advertise, if the Bill goes through.

Don Foster: Does that mean that the Minister will introduce amendments to clause 7? I take it from his body language that that will not be the case. I just want to be clear. I think that what he has said means that all existing casinos stay exactly as they are, albeit with the two changes to which he referred. If one of those casinos, in Chelmsford or wherever it might be—it already exists—lobbies the advisory committee on the basis that it wishes to convert itself into a small, large or even a regional casino, that will mean that it becomes one of the 24.

Richard Caborn: Absolutely. That is why we can say with certainty that there will be no more than 150 casinos. There could be fewer. If all 24 go to operators that are already there, there will only be 136 casinos. We could have a maximum of 150, but if 24 casinos are already operating and want to take up the licences in their areas, they could do that.

Kevan Jones: Will the Minister give way?

Richard Caborn: This is the last time.

Kevan Jones: Does not the explanation given to the hon. Member for Bath (Mr. Foster) mean that the selected 888 will have a considerable commercial advantage over existing casinos? What we will have is a reduction in the overall number of casinos because existing ones will be at a commercial disadvantage. Will there not be a reduction in the numbers, which might be what people want?

Richard Caborn: That is one scenario. However, we can paint another scenario. Had we done what we said we  were going to do at the beginning of the Second Reading, a lot of those casinos would definitely have gone. There is no doubt that the 130-odd casinos have had a monopoly under the 1968 Act. The Bill will liberalise that marketplace because the demand is there. We are acting cautiously, which is why we are introducing three different types of casino: the regional, the large and the small. The House will determine later whether it wants that to progress, but there will be a maximum of 150 casinos operating in this country. It depends which scenario one wants to paint. It could be said that the current operators of casinos are much more protected than they would have been had the original proposition of between 20 and 30 regional casinos gone through.

Richard Page: Will the Minister explain why millions of pounds were wiped of the share value of casino operators if that is going to be so successful?

Peter Pike: Order. The Minister is not giving way.

Richard Caborn: If over time the new casinos are seen to be developing in a cautious and socially responsible fashion, Parliament can relax the very tight restrictions on supply inherent in the proposals. For the moment, we are taking one cautious step at a time, which I believe to be the right approach.

John Whittingdale: We do not have a great deal of time left this morning so perhaps I shall just introduce some of our concerns. I congratulate the Minister on his bravado performance, but I hope that he will understand that if we are to have a meaningful debate on the clause, there are an awful lot of questions that it would be helpful to have answered before we explore the Government's thinking, rather than waiting until the Minister sums up. That is why a number of hon. Members on both sides of the Committee wanted to probe the Minister a little further. An awful lot of questions remain unanswered even after the statement the Minister made when the bombshell was dropped on 16 December, and the tabling of the amendments. We need greater clarification on those questions.
Part of the problem is that the genesis of the Bill was a matter of consultation, building consensus and giving the industry and other interested bodies the opportunity to have an input. However, the new clause, which fundamentally changes the thrust of the Bill, has come out of nowhere. It has certainly not been subject to anything like the consultation that the Bill had had before. As far as I can see, it was subject to no consultation at all. The gasps of amazement with which it was greeted from every corner suggests that the Government had not sought to obtain the views of any of the interested bodies before reaching their conclusions. I said that the Government had  abandoned the consensus approach, perhaps the only consensus that I have managed to find is one that this is an absurd position to adopt and will make for extremely bad law.

Richard Caborn: If I recall, the amendment from the official Opposition was for four regional casinos. What would the hon. Gentleman have done about large and small casinos had the amendment for four regional casinos been accepted?

John Whittingdale: That is an important part of our argument. We draw a strong distinction between the approach needed for the introduction into this country of an entirely novel concept: the regional casino—an enormous investment attracting thousands of people every week. Regional casinos incorporate up to 1,250 machines of a kind that we have never had in this country. We have always said that that needs to be introduced very carefully, which is why we advocated the pilot scheme and all the other safeguards. However, the considerations that apply to large and small casinos are entirely different. Those casinos are not a novel concept: we have had large and small casinos in this country for some time. They will not contain any category A machines, so all the risks that people are concerned about that are associated with category A machines will not apply to large and small casinos.
If there is a danger that capping the number of regional casinos might lead to a proliferation of large or small casinos, there are safeguards already built into the Bill that would prevent that—or at least that was what the Government told us repeatedly throughout the earlier stages of our debate. They had decided not to go down the route of imposing an arbitrary limit on number, but had instead put in safeguards that would use market mechanisms to limit the number. We feel that if there is a danger that capping the number of regional casinos will lead to greater proliferation, that can and should be addressed by a different method from the one that the Government have suddenly decided to adopt, which is to impose an identical cap on the number of large and small casinos as well. I have yet to discover anybody who recommends such a strategy. It was greeted with some astonishment when it was unveiled. 
This debate is extremely unsatisfactory because many of our concerns relate to the way in which the Government have chosen that particular number, why they have decided to adopt that route and not another, and how the process of selection will take place. In the normal course of a debate of this kind, the best way of probing the Government's thinking would be to table amendments that reflected how we felt that the system could operate better. However, because the Government have dropped the provision in right at the last minute as a new clause, we have no opportunity to table any amendments to it. We are presented this morning, on a take-it-or-leave-it basis, with a huge new clause that completely changes the Bill. We must either support the entire new clause or reject it.

Peter Pike: Order. I did indicate the procedure for tabling amendments to the new clauses before  Christmas. They could have been tabled up to Friday of last week. I made that clear in the last sitting before the recess. I was trying to be helpful to Committee members. I just want to make that clear.

John Whittingdale: I am grateful to you, Mr. Pike. Perhaps we did miss an opportunity. However, given the time scale we were set, it would have been extremely difficult. There will be a better debate on Report, when we will be able to table our amendments to the new clause and when we might be able to test the  Government's approach in a little more detail. However, that is not to say that we cannot flag up a number of our concerns in the stand part debate on the new clause. That is what I seek to do this morning.
It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
Adjourned till this day at half-past Two o'clock.